Is digital banking growth coming at the expense of customer experience?

mobile banking, digital banking, mobile money

Growth in digital banking providers and offerings has been one of the defining trends of the financial services industry in recent years, and it continues at pace.

Digital-only banks such as BankMobile in the US, Number26 in Germany and Monzo in the UK have placed a strong emphasis on delivering a simple, efficient and rewarding experience for their users.

However, recent research has indicated that rapid growth in the digital space could be coming at the expense of customer satisfaction.

The J.D. Power 2018 US Retail Banking Satisfaction Study revealed that digital-only customers now account for more than a quarter (28 percent) of the retail bank customer base, but tend to be less satisfied than those who use a combination of branch and digital services.

Specific findings showed that US consumers who exclusively used online or mobile banking channels in the past three months reported an overall satisfaction rating of 791 on a 1,000-point scale.

Those who exclusively used branches were slightly more satisfied (804), while the happiest of all were people who visited a branch at least two times in the past three months and also used online or mobile banking (823).

Lower satisfaction scores among digital-only users were attributed largely to weaker performance in three key areas: communication and advice; products and fees; and new account opening.

Paul McAdam, senior director of the banking practice at J.D. Power, said: “There is no doubt that digital banking channels give banks an enormous opportunity to reduce costs, but the risk is that those cost savings come with lower levels of customer engagement.

“Right now, retail banks need to address the growing digital divide that is emerging within customer segments.”

Mr McAdam also advised banks to focus on providing personalized advice in all interactions – whether digital or in person – and to ensure they are meeting customer needs, regardless of the channel.

 

Image credit: marchmeena29 via iStock

Written by Jack Dougal

Jack Dougal

Jack Dougal is Banking.com's resident news reporter. He writes regular blogs covering the latest stories and key developments in the global financial services industry.

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